China is winning the trade war

Shawn Tully

Fortune

Look past the rhetoric and you’ll see America is losing the trade war with China, said Shawn Tully. President Trump said that Chinese manufacturers would reduce prices to absorb the cost of his tariffs. They haven’t. On the contrary, in 2018, U.S. domestic prices rose “one-to-one with tariffs levied in that year,” according to one new study. Consumers paid every dollar of those tariffs. But at least the government collected that levy and could “cycle it into the economy by funding anything from aid to farmers” to infrastructure. Now, though, companies looking to save on the 25 percent tariffs have gone to costlier, less efficient producers in other countries, such as Mexico and Bangladesh. The companies overpay by as much as 20 percent, consumers still take a hit, and the government gets nothing. By contrast, look at China. “Instead of slapping one-size-fits-all tariffs across vast categories of goods, Chinese President Xi Jinping is targeting only products the country can’t buy at comparable cost elsewhere.” China has imposed a 28 percent levy on soybeans from the U.S., because it can get them from Brazil and Argentina. But the duties on airplanes, cars, and pharmaceuticals remain below 3 percent. “At the same time, China has lowered tariffs on every other country,” making it even harder for U.S. manufacturers to compete.